Australian businesses need China; hope bilateral ties reset
Editor’s Note:
It’s been a bumpy year for China- Australian bilateral relations in 2020 on the diplomatic front. How will the intensifying tensions affect economic and trade ties between the two countries? How do Australian firms evaluate the Chinese market at the moment and in the future? The Global Times ( GT) recently conducted an exclusive interview with Nick Coyle, CEO of China- Australia Chamber of Commerce ( AustCham China) to share insights on the topic.
GT: How do you evaluate the recent changes of bilateral trade relations since the outbreak of COVID- 19 pandemic this year? What is the Chamber’s forecast for bilateral trade value in 2020?
Coyle: It is certainly an understatement to say that 2020 has been a challenging year for Australian business in China. The COVID- 19 pandemic has disrupted markets, regional supply chains and the individual enterprise- level day- today operations were greatly impacted. Overlaying this situation, the rapid deterioration of bilateral governmentto- government relations has resulted in additional costs and uncertainties for businesses in both countries.
The bilateral trade figures show there is a very mixed picture for exporters. Companies operating in sectors facing trade actions, such as wine, barley and beef, are experiencing significant challenges. For many sectors, exports are holding up well so far in 2020 despite COVID- 19 and bilateral issues. Export figures to China at the end of October show a 13.3 percent increase year- onyear, however if we remove iron ore from those numbers, we see a decrease of 24 percent when compared to 2019. Clearly COVID- 19 has had a significant impact.
GT: Under the fraught trade ties sentiment, what do most Australian businesses in China evaluate the Chinese market? Coyle: The fundamental drivers of the China- Australia economic relationship still very much apply today as they did one year ago or five years ago. In December 2015, the China- Australia Free Trade Agreement or ChAFTA came into force.
The then Australian Trade Minister summed it up well when he said that ChAFTA was “built around two economies perfectly complementing each other.”
China’s exports to Australia grew over 66 percent in four years from 270 billion yuan ($ 41 billion) to 406 billion yuan, while Australian exports to China have essentially doubled in the same period driven by commodities and resources feeding China’s rapid development.
In repeated surveys over past months our members have voiced growing concerns over the state of bilateral relations. The state of these relations is clearly seen by far as the “top business risk” with 72 percent of members. As a result, it is natural that companies would reassess their business plans. So far there has not been any indication that Australian companies are withdrawing from China.
GT: To your knowledge, have Australian business circle realized the importance of the Chinese market?
Coyle: The importance of the Chinese market has been front and center of business in Australia for many years. China is the destination for over one third of total exports and constitutes almost 20 percent of its imports. By far,
China is Australia’s largest trading partner. Our free trade agreement has accelerated these outcomes due to lower barriers for trade and investment. China and Australia have always enjoyed strong people- topeople ties and Australian companies are making strenuous efforts with their Chinese business partners to ensure these ties will continue despite present challenges.
GT: What is the Chamber’s view on the prospect of bilateral trade?
Coyle: Despite recent headwinds, AusCham members remain optimistic when looking at long- term prospects in China and the region. Opportunities will arise in areas relating to China’s goal of transitioning to a green economy and achieving carbon neutrality by 2060. Both countries are ambitious in terms of transforming themselves into digital economies and both seek to improve the quality and accessibility of their public services in education, medical services and elderly care.
To achieve the win- win results, the conditions need to be created for leading, innovative companies in China and Australia to explore how to work together to create new business opportunities to support the post- COVID19 recovery, and achieve these social and economic development objectives.
This is an abridged version of the interview. For the full version, please go to the website of the Global Times.